Hebron awaiting appellate court ruling in yearslong battle over incomplete Trails subdivision

Hebron resident Manny Flores wants to ride his longboard and help his young kids learn to bike on the streets of their neighborhood, the Trails of Hebron, just southwest of the village’s downtown.

But he can’t do so without risking injury.

That’s because the roads in the Trails subdivision, which was abandoned by South Barrington-based Kennedy Homes during the Great Recession after just a few dozen homes were erected, remain incomplete without any final layer of smooth pavement over the rough, middle layer that has been laid.

Potholes are all over the place, and some residents of the neighborhood have even tried patching them on their own, as the roads have yet to be maintained by anyone since Kennedy lost the mostly empty subdivision in foreclosure amid the Great Recession in 2008, court documents show.

“It hurts my knees to ride my longboard,” Flores said. “Your kids ride their bikes, you have to be careful they don’t hit a pothole and they fall.”

Flores and his family moved into the neighborhood in 2017, knowing the roads were in rough shape. But he expected some progress to be made and the roads to be in better shape within a year or so of living there.

A resolution has proved elusive in the court battle started in 2015, when the village of Hebron filed a lawsuit naming Riverdale-based J&L Contractors as defendants to try to compel the business, which bought the subdivision at auction in 2013, to finish building the infrastructure Kennedy Homes left incomplete.

Flores, along with village officials, is adamant J&L is responsible for completing and maintaining the roads until the village accepts their condition.

Following Kennedy Homes falling into foreclosure on the subdivision, a court in 2013 approved the sale of 138 lots out of the 174 total in the Trails to J&L for just more than $214,000.

Hebron initially won partial victory in McHenry County court, but in January 2020, was handed a final decision that favored J&L.

That ruling found that Hebron was wrong to sue J&L because the village already sued Kennedy Homes more than a decade ago over another aspect of the 2005 annexation agreement that requires the owner of the incomplete subdivision to build the infrastructure and supply a letter of credit to the village for a share of those costs.

Hebron’s previous suit against Kennedy was voluntarily dismissed by the village shortly after it was filed in 2009 because Kennedy agreed to pay the village the $1,425 it sought in unpaid attorneys fees and other administrative costs related to the village’s approval of the annexation agreement.

In the more recent case involving J&L, the village is seeking a letter of credit worth $1.8 million in 2017 dollars from the company, an amount the village attorney said the village would try to translate into 2021 dollars if Hebron is successful with its appeal to the Illinois Appellate Court’s Second District.

The credit would help the village secure the completion of the subdivision’s roads, and it is required to be put up by the developer by the annexation agreement, the village has said.

Arguments by J&L have sought to put Kennedy Homes on the hook for finishing the roadways and infrastructure, and J&L was allowed to bring Kennedy into the suit as a third party.

Kennedy then turned around and sued the village in McHenry County court, but the court ruled in the village’s favor in that case.

“Kennedy Homes did go insolvent. They lost the property. It was taken over by the bank. And then it was sold. My point is that it was even years after J&L bought that the village decided to try and do something,” said Jean Lasics-Wessels, an attorney for Kennedy Homes who exited the case before it concluded.

She pointed out that Hebron failed to cash in on the letter of credit that Kennedy Homes initially supplied. Had the village done so, it could have used that funding to complete a substantial amount of the improvements.

The village’s failure to cash Kennedy’s letter of credit before it expired was a result of a misunderstanding on the part of a former village official, said village attorney Michael Smoron, of the Crystal Lake-based firm Zukowski, Rogers, Flood and McArdle.

But he also said that legally, it doesn’t matter the village never accessed the funds from Kennedy and that there was no guarantee the village would have been able to use them. Had the village tried, Kennedy could have litigated to try preventing the money from being divulged to the village or to delay the funding from hitting village coffers.

The annexation agreement requires the land owner of the subdivision to complete the infrastructure and supply credit to the village until the village accepts the condition of the infrastructure as complete, Smoron said, regardless of whether a previous letter of credit was never drawn on after the agreement was breached.

“We’d like to get that subdivision fixed or at least back on track,” Hebron Village President Robert Shelton said, adding that other home builders have expressed some preliminary interest in purchasing some of the empty lots from J&L in recent years. “This has been in litigation for quite some time.”

JJ Townsend, another resident of the Trails and a homeowner there since 2012, said the village not cashing in the previous credit has been consequential.

“The village messed up initially. They handled it wrong,” Townsend said.

But he also said that J&L has responsibility to pick up where Kennedy left off.

“I think J&L has the obligation. Had they moved in right away and built a bunch of houses and sold them with a profit as expected, there would be no excuse,” Townsend said. “Just because they bought the land and the economy didn’t work to build a bunch of homes or flip the property, that’s not my problem or Manny’s [Flores] problem. I look at the roads as part of the cost of doing business. The only ones that are losing right now are just the residents.”

A lawyer for J&L declined to comment on the case. Attempts to reach J&L representatives were unsuccessful. Attempts to reach Kennedy Homes leaders were unsuccessful.